Most delegations described the second
draft
of the July package decision as broadly an improvement, but General
Council chairperson Shotaro Oshima said he was concerned about the “sheer
number” of comments to deal with in the limited amount of remaining time.

NOTE:
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NOT PREJUDICE MEMBER GOVERNMENTS' POSITIONS.

The discussion took place at an informal meeting of heads of delegations,
shortly after the second draft was circulated at 7am on 30 July 2004.

Most speakers said the text was at least a step in the right direction, with
several pointing out that the negotiations were radically different from the
situation almost a year ago at the Cancún Ministerial Conference, in
difficult subjects such as agriculture, the Singapore issues (trade
facilitation, investment, competition policy, and government procurement),
and cotton.

After the two-and-a-half hour meeting, delegates began consultations in a
variety of formats, including within their own groups, and with their
capitals. Chairperson Oshima warned them to prepare to work through the
night and possibly into Saturday 31 July.

The second draft arrived later than planned
because of important consultations on cotton among ministers, which lasted
until the early hours, Ambassador Oshima said.

He reminded them that the objective is to reach an agreement that will allow
the negotiations to move ahead in the next phase. “We all know that this
deal is intended to open the door to progress in our work programme, no
more, no less,” he said.

Agriculture: Ambassador Tim Groser, who
chairs the agriculture negotiations and is the agriculture “facilitator” in
the “July package” talks, said the revision reflected a number of points
where members had clearly felt changes were needed.

These included what delegations saw as a serious imbalance between the
amount of detail on provisions for developed and developing countries,
including “sensitive products” (for which developed and developing countries
would be allowed some flexibility in increasing market access), and “special
products” (available to developing countries for additional flexibility or
exemptions). The latest version attempts to improve the balance.

Also new in the text are provisions on cotton, a downpayment of a 20%
reduction in trade-distorting domestic support in the first year, and
clearer provisions on ensuring that the elimination of export subsidies is
matched by the elimination of subsidy components of export credit, food aid
and the exports of state trading enterprises (“parallelism”), Ambassador
Groser said.

Industrial products (NAMA): Ambassador
Oshima reported that his consultations the previous evening had proved
inconclusive (see below). “The only option left
was to find a formulation which reflects the best approximation of the way
to address the major concerns that have been raised by members,” he said.
The solution has been to add a “headnote” to Annex B.

Development: The text on this issue has
been re-arranged, with new headings including one on “other developmental
issues”. The proposed compromise on how to deal with the concerns of more
vulnerable developing countries and preferences, without creating new
categories and privileges within these countries, is reflected in this
section, Ambassador Oshima said.

In addition, the section on “implementation” issues, now expands on how the
consultations held by the director-general should be conducted, including
the possibility of holding dedicated consultations.

The part dealing with least-developed countries has also been strengthened,
he said.

Trade facilitation: following
constructive consultations, the revisions include stronger wording on
technical assistance, capacity constraints and special treatment for
developing countries, and other provisions reinforcing “the principle that
members should not be obliged to commit themselves to measures beyond their
means,” Ambassador Oshima said.

Recognizing that “this revision won’t make everybody happy,” the chairperson
added that it is the result of genuine give and take, covering most
concerns. “I do not believe we have compromised anyone’s fundamental
interests.”

Ambassador Oshima added: “I would like to recall that your agreement here
does not preclude you from shaping the end product, as all we try to do
today is launch a process, with its final outcome being up to members
to determine as we move forward. … The principle of consensus still protects
all of you in the negotiations we will be launching.”

Director-General: Dr Supachai
Panitchpakdi urged delegations to view the text from three perspectives: a
broad view that recognizes that different people have different interests,
and that these have to be balanced against each other; a longer-term view of
using the document to move the negotiations up to a higher level; and the
membership’s shared responsibility to avoid “the destructive influence of
the status quo”.

“Let us together take the collective decision to move the trading system
forward,” the director-general said.

About 40 delegates spoke, some of them ministers,
and including representatives of various groups. Most said their comments
were preliminary since they were still discussing the text with their
capitals.

Among the many issues raised were:

whether the text meets their concerns on
agricultural topics such as flexibility for developing countries and the
balance with the treatment for developed countries, the Blue Box, developing
countries not having to reduce “de minimis” amounts of trade distorting
domestic supports (they are currently allowed up to 10% of the value of
production), provisions on export taxes (opposed by a number of countries),
and discussions on setting ceilings on tariffs

the legal status of the “headnote” on
non-agricultural market access, described as a “vehicle” or “vessel” (or by
one mystified delegate as an “unidentified flying object”)

the provisions on developing countries

the wording on “implementation” issues, including
the relationship with the Trade Negotiations Committee and such topics as
geographical indications.

Concluding, Ambassador Oshima said he was
concerned about the sheer number of issues. Unless delegations are willing
to cooperate with each other, the talks could run out of time, he warned. He
added that delegations should be prepared “to work through into Saturday.”

Before that:
consultations on industrial products

The previous afternoon, 29 July, General Council
Chairperson Shotaro Oshima convened a meeting open to all delegations on
non-agricultural market access (NAMA), essentially industrial products. The
purpose was to try to find wording that everybody could accept on the NAMA
annex (B) in the draft agreement now under discussion.

He noted that there was progress in other areas of the “July package” but
members were far from convergence in NAMA.

Several countries spoke. Some, mostly but not only African, said they could
not accept a text that had not been agreed — Annex B of the draft, which is
taken from the one submitted to the Cancun Ministerial by its chairman,
Mexican Foreign Minister Luis Ernesto Derbez. They supported a negotiation
on the annex itself. Some of them rejected the notion that there was too
little time to renegotiate the text, and complained that this was creating
undue pressure.

Others, both developed and developing, said that the annex is the best if
not the only practical solution to move forward. It should not be
interpreted as an agreed text, only as a platform for further negotiations,
they said. Some described the text as a delicate balance, a product of
almost three years of negotiations. To open it now could unravel the whole
process, they said.

Between these two were countries ready to adopt the text for the July
package but with some “legal qualification” — a legal clarification of the
status of the annex, sometimes called “a vehicle” that could give them more
political comfort.

The meeting was inconclusive and the chairman said he would reflect further
with the facilitator (mediator), ambassador Stefan Johannesson of Iceland
who has chaired the NAMA negotiations, to produce a revision.